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NISM Certifications · NISM-Series-VI: Depository Operations · Foreign Portfolio Investors (FPI)

Under the FPI Regulations, 2019, FPIs are classified into categories based on risk. Which of the following is the correct description of the categories currently in force?

The FPI Regulations, 2019 provide two categories, Category I and Category II. Category I includes lower-risk entities like government-related investors, and Category II covers all other eligible FPIs. The older three-category structure was merged into these two.

  1. AThree categories: Category I, II and III
  2. BTwo categories: Category I and Category IICorrect
  3. CFour categories: A, B, C and D
  4. DA single category with uniform KYC for all FPIs

Explanation

The 2019 regulations merged the earlier three categories into two. Category I covers low-risk entities such as government and government-related investors, while Category II covers all others, such as regulated funds and corporates. The three-category structure belonged to the earlier regime.

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